MSME rules next month, focus on global value chains

Synopsis

The MSME ministry is set to announce new regulations for small businesses next month. These amendments focus on improving invoice financing through the Trade Receivables Discounting System, ultimately aiming to bolster cost efficiency and global competitiveness. As Parliament has recently addressed issues of delayed payments, digital platforms will play a crucial role in overseeing the effective implementation of this law.

New Delhi: The ministry of micro, small and medium enterprises (MSME) plans to notify rules next month to put new legal provisions for small businesses into effect, with the framework set to streamline invoice financing through the Trade Receivables Discounting System.

Going forward, the ministry's focus will be to make small businesses more cost competitive, improve quality and integrate them more deeply into global value chains, Bharat Khera, MSME secretary, said. The rules will detail the functioning of the TReDS, including the onboarding of buyers and suppliers and the processing and routing of invoices. Khera said the ministry will also provide handholding to smaller enterprises that may find it difficult to navigate the TReDS system. "We have already started the exercise of formulating the rules," said Khera, adding that these are expected to be notified "in the next month or so".

Last week, Parliament passed the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, which seeks to address delayed payments to MSMEs by introducing faster dispute-resolution timelines, strengthening recovery mechanisms and improving liquidity for small businesses.

The legislation, which amends the 2006 Act, mandates all central public sector enterprises to settle procurement invoices from MSMEs through TReDs. It also empowers courts to order payment of at least 50% of the amount awarded to an MSME supplier if a challenge to the award remains pending for more than six months.

Highlighting the next steps, Khera said that unless MSMEs become cost competitive and adhere to quality standards, they would never be able to become part of the global value chain. MSMEs contribute around 31% to India's gross domestic product, 35% to manufacturing output and nearly 48% to exports. The MSME ministry will continue to use its existing institutional mechanism to monitor implementation of the amended law, with digital platforms expected to make the process more effective, noted Khera.

On delays in payments from the private sector, the secretary mentioned the government does not want to increase the compliance burden on private industry and would instead continue to nudge large companies through industry associations to ensure timely payments to MSME suppliers.